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Loan-to-value ratio

What percentage of the asset value is financed?

Your numbers

$
$

Loan-to-value

80.0%

Equity portion20.0%
Equity dollars$90,000

Tip. Getting below 80% LTV is what removes private mortgage insurance on most US conventional mortgages.

Assumptions

  • LTV = loan ÷ asset value.
  • Equity = 1 − LTV.

Explore the numbers

Examples and charts

Start with a scenario, then read the response curve to see which input actually moves the answer.

Example 1

Low down payment

A 5% down purchase, where mortgage insurance is effectively certain.

Loan-to-value

95.0%

Example 2

Twenty percent down

The threshold most conventional mortgage insurance rules are built around.

Loan-to-value

80.0%

Example 3

Refinance after appreciation

The same loan against a higher valuation a few years later.

Loan-to-value

63.5%

Sweeps loan balance / amount from half to one and a half times your value, holding everything else fixed.

Response curve

How loan balance / amount moves the result

Loan-to-value

80.0%

40%60%80%100%120%$200k$300k$400k$500k
Chart axis: Loan balance / amountNow $360k → 80%

What this calculates

Shows how much of an asset's value is financed. Lenders use LTV to price loans and to decide whether mortgage insurance is required.

How to use it

  1. Start with loan balance / amount and work down the form, or load an example to begin from a realistic case.
  2. Read the headline result alongside the supporting rows, which show the intermediate figures behind it.
  3. Check the assumptions. They decide what the number includes and, more importantly, what it leaves out.
  4. Sweep loan balance / amount on the response curve to see how much it actually moves the answer.
  5. Run a cautious case as well as an optimistic one before using the estimate in a decision.

Common mistakes

  • Using an optimistic online estimate as if it were an appraisal.
  • Forgetting a drawn HELOC when calculating combined LTV.
  • Assuming mortgage insurance falls off on its own after appreciation.

Formula

LTV = loan ÷ asset value; equity share = 1 − LTV

Inputs

  • Loan balance / amount
  • Asset value

FAQ

Is appraised value or purchase price used?

Lenders generally use the lower of the two on a purchase. On a refinance they use the appraisal, which is why a low appraisal can sink a refinance.

How do I get out of mortgage insurance?

On most US conventional loans you can request removal at 80% LTV and it drops automatically at 78%, both based on the original value. Reaching 80% through appreciation usually needs a new appraisal and a request.

Does a second mortgage count?

For combined LTV, yes. Add any second mortgage or drawn HELOC to the loan figure, because that is the number a lender will underwrite against.

Are these numbers financial advice?

No. They are educational estimates based on the inputs and assumptions on this page. Confirm important decisions with a qualified professional and your own documents.

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